NEW YORK — You can recycle your waste, grow your own food and drive a fuel-efficient car. But being socially responsible isn’t so easy when it comes to the clothes on your back.
Jason and Alexandra Lawrence of Lyons, Colo., eat locally grown food and fill up their diesel-powered Volkswagen and Dodge pickup with vegetable-based oil. They even take silverware to a nearby coffeehouse to avoid using the shop’s plastic utensils.
But when it comes to making sure that their clothes are made in factories that are safe for workers, they fall short.
“Clothing is one of our more challenging practices,” said Jason Lawrence, 35, who mostly buys secondhand. “I don’t want to travel around the world to see where my pants come from.”
Last month’s clothing factory building collapse in Bangladesh that killed more than a thousand people put a spotlight on the sobering fact that people in poor countries often risk their lives working in unsafe factories to make the clothes Westerners covet.
The disaster, which occurred after a fire in another Bangladesh factory killed 112 people in November, highlights something just as troubling for socially conscious shoppers: It’s nearly impossible to make sure that the clothes you buy come from factories with safe working conditions.
Very few companies sell clothing that’s “ethically made,” or marketed as being made in factories that maintain safe working conditions. Ethically made clothes make up a tiny fraction of 1 percent of the $1 trillion global fashion industry. And with a few exceptions, such as the 250-store clothing chain American Apparel Inc., most aren’t national brands.
Major chains typically use a complex web of suppliers that contract business to other factories. That means the retailers themselves don’t always know the origin of clothes when they’re made overseas.
Even a “Made in USA” label provides only a small amount of assurance: The tailors who assembled a skirt may have good working conditions, but the fabric may have been woven overseas in an unsafe environment.
“For U.S.-made labels, you have good assurance, but the farther you get away from the U.S., the less confidence you have,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy.
Policing isn’t easy
Most global retailers have standards for workplace safety in the factories that make their clothes. And the companies typically require contractors and subcontractors to follow the guidelines. But policing factories around the world is a costly, time-consuming process that’s difficult to manage.
There were five factories in the building that collapsed April 24 in Bangladesh. They produced clothing for retailers including Children’s Place and the Canadian company Loblaw Inc., which markets the Joe Fresh clothing line.
“I have seen factories [in Bangladesh and other countries], and I know how difficult it is to monitor the factories to see they are safe,” said Walter Loeb, a New York-based retail consultant.
And some experts say that retailers have little incentive to do more because the public isn’t pushing them to.
America’s Research Group, which interviews 10,000 to 15,000 consumers a week, mostly on behalf of retailers, says shoppers seem more concerned about fit and price than worker safety or low wages.
C. Britt Beemer, chairman of the firm, said shoppers rarely mention “where something is made” or “abuses” in the factories in other countries.
“We have seen no consumer reaction to any charges about harmful working conditions,” he said.
Tom Burson, 49, said that if someone tells him a brand of jeans is made in “sweatshops by 8-year-olds,” he won’t buy it. But overall, there is no practical way for him to trace where his pants were made.
“I am looking for value,” said Burson, a management consultant who lives in Ashburn, Va. “I am not callous and not unconcerned about the conditions of the workers. It’s just that when I am standing in a clothing store and am comparing two pairs of pants, there’s nothing I can do about it.”
New awareness
Some experts and retailers say things are slowly changing.
Swati Argade, a clothing designer who promotes her Bhoomki boutique in the Brooklyn borough of New York as “ethically fashioned,” says people have been more conscious about where their clothes come from.
The store, which means “of the earth” in Hindi, sells everything from $18 organic cotton underwear to $1,000 coats that are primarily made in factories in India or Peru that are owned by their workers or that are designed by local designers in New York.
“After the November fire in Bangladesh, many customers say it made them more aware of the things they buy and who makes them,” Argade said.
Jennifer Galatioto, a 31-year-old fashion photographer from Brooklyn, has become thoughtful about where her clothes are made. “I am trying to learn the story behind the clothing and the people who are making it,” she said.
Some retailers are beginning to do more to ease shoppers’ consciences.
Wal-Mart Stores Inc., the world’s largest retailer, said in January that it would cut ties with any factory that failed an inspection, instead of giving warnings first as had been its practice. The Gap Inc., which owns the Gap, Old Navy and Banana Republic chains, hired a fire inspector to oversee factories that make its clothing in Bangladesh.
Still, Wal-Mart, Gap and many other global retailers continue to back off from a union-sponsored proposal to improve safety throughout Bangladesh’s $20 billion garment industry. As part of the legally binding agreement, retailers would be liable when there’s a factory fire and would have to pay factory owners more to make repairs.
Fair Trade U.S.A., a nonprofit founded in 1998 to audit products to make sure workers overseas are paid fair wages and work in safe conditions, is hoping to appeal to shoppers who care about where their clothing is made. In 2010, it expanded the list of products that it certifies beyond coffee, sugar and spices to include clothing.
The organization, known for its black, green and white label with an image of a person holding a bowl in front of a globe, said it’s working with small businesses such as PrAna, which sells yoga pants and other sportswear items to merchants like REI and Zappos.
To use the Fair Trade label on their products, companies have to follow a set of safety and wage standards.
5% more expensive
Still, less than 1 percent of clothing sold in the U.S. is stamped with a Fair Trade label. And shoppers will find that Fair Trade-certified clothing is typically about 5 percent more expensive than similar items that don’t have the label.
Fair Indigo is an online retailer that sells clothes and accessories that are certified by Fair Trade U.S.A., including $59.90 pima organic cotton dresses, $45.90 faux wrap skirts and $100 floral ballet flats. It generates annual
sales of just under $10 million.
The company’s catalog and website feature some of the garment workers in countries including Peru. “We are connecting consumers with the garment workers on a personal level,” said Rob Behnke, Fair Indigo’s co-founder and president. “We are showing that the garment workers are just like you and me.”
Los Angeles-based American Apparel, which says it knits, dyes, cuts and sews all of its products in-house in California, touts on its website that the working conditions are “sweatshop free.”
In an interview in November, the company’s founder and CEO, Dov Charney, said companies can control working conditions but they need to bring the production to the U.S.
“When the company knows the face of its worker, that’s important,” Charney said.
Made in USA is Back in Style For Small Businesses
in Reshoring, Small Business/by MAM TeamAP Business Writer
“Shipping costs are tremendous,” he says. “I could put that money into the manufacturing side in the U.S.,” he says.
Reverie is one of a growing number of small businesses that are chipping away at the decades-old trend of manufacturing overseas. They’re doing what’s known as reshoring, moving production back to U.S. factories as labor costs grow in countries like China and India and shipping also becomes more expensive. Over the last 20 years, the price of a barrel of oil has risen to about $95 from $20.
There are other issues encouraging the shift. Owners are tired of having to wait weeks for shipments on slow-moving container ships, and they want to get products to customers faster. Some newer businesses aren’t even considering overseas manufacturing. It’s not just small businesses. Some of the largest companies in the U.S. are also joining the trend. Apple Inc. and Caterpillar Inc. are among the manufacturers planning to bring production back to the U.S.
Reverie has had the bases of its beds made in Taiwan since the company was founded. Rawls-Meehan and a business partner in Taiwan agreed that the cost savings and proximity to many customers were good reasons to manufacture there.
“The mentality was that products were going to be manufactured more cheaply in Asia than in the U.S.,” Rawls-Meehan says.
But shipping costs have risen to as much as 20 percent of the wholesale cost of a bed made in Asia. In 2004, it was just 10 percent on some of Reverie’s products. So the company is now making a new line of upscale beds in Silver Creek, N.Y., near Buffalo. Shipping on those beds accounts for no more than 5 percent of the wholesale price. That offsets the higher cost of labor in this country.
Rawls-Meehan is considering moving more of his manufacturing to the U.S., but because the company also sells beds to Asia and Australia, he says it likely will always have overseas production.
A good deal of U.S. manufacturing shifted to foreign shores in the 1990s and early 2000s. Workers in China, India and other countries earned far less than workers in U.S. factories. That lowered costs substantially for U.S. companies. Between 1997 and 2008, the U.S. lost nearly 4.5 million manufacturing jobs, according to the Census Bureau. And the amount of overseas manufacturing by U.S. companies grew 141 percent between 1997 and 2010, according to the government’s Bureau of Economic Analysis.
But the growing middle class in countries such as China and India have been demanding and getting higher wages. In Asia, labor costs are rising 20 percent a year, compared to 3 percent in the U.S., says David Simchi-Levi, a professor at the Massachusetts Institute of Technology whose specialties include supply chain management.
A weaker dollar has also made foreign-made goods more expensive. A study by the consulting firm AlixPartners predicts that the costs of manufacturing in the U.S. and China on average would be equal in 2015. For products including disposable packaging and some metal parts, costs are already equal or less when they’re made in the U.S., the study found.
Reshoring began picking up momentum in 2010 after the recession and as the dollar began to lose value, says Lisa Ellram, a professor at Miami University of Ohio who specializes in supply chain management. Businesses that were unsure how strong their sales would be in a weak economy didn’t want to make as many commitments to far-flung factories.
“They really just didn’t have as much certainty about their volume and their needs, so it was maybe a little bit easier to deal with somebody closer,” she says.
Innovations in manufacturing in the U.S. are encouraging the shift. Many U.S. companies use robots and highly specialized processes that allow them to make custom components for the automotive and aerospace industries.
“Instead of hiring people, we’re using robots,” Ellram says. Chinese companies are also using robots, but U.S. manufacturers are ahead of them, she says.
The government doesn’t have figures tracking how much manufacturing companies are bringing back the U.S., according to Jeannine Aversa, a spokeswoman with the Bureau of Economic Analysis. About 50,000 manufacturing jobs came back to the U.S. between 2010 and 2012, many of them in factories that turn out electrical equipment and components and metal parts, according to the Reshoring Initiative, a nonprofit group that advocates moving manufacturing back to the U.S.
The trend could gain momentum because demand for U.S. goods is growing. Ninety-five percent of manufacturers surveyed last year said they are increasing their purchases from domestic companies, or keeping them at the same level as 2011, according to ThomasNet, a company that operates an online marketplace where businesses can connect with manufacturers, distributors and service companies.
The amount of time it takes to get goods made overseas is another reason manufacturing is coming back to the U.S. It’s taking longer to ship finished products because cargo ships have lowered their speed by 20 percent to conserve fuel, Ellram says. That reduction adds four or five days to a container ship trip from China, she says. It takes two weeks or more for a ship to travel from China to the U.S., depending on which ports it departs from and where it makes its deliveries.
Shipping times matter for companies that need to get their goods to market quickly. Now that Cotton Babies, a manufacturer and retailer of baby merchandise, has moved manufacturing of its cotton diapers to Denver from Egypt, it has cut in half the time it takes to get them to market, says CEO Jennifer Labit.
Product development can be slowed by the distance between designers in the U.S. and manufacturers in other countries, Labit says. Communication takes longer and expensive overseas trips are often necessary to make sure that the products are being made to specifications.
Quality, and the ability to fix problems faster, gives small domestic manufacturers an advantage over foreign companies, Ellram says.
“Those are the things that (domestic) small businesses can use as a selling point,” she says.
A myriad of problems helped Reading Truck Body decide to bring manufacturing of truck parts back to the U.S. from China.
Shipments were disorganized. The compan
y didn’t know until it opened containers which parts had been shipped. That meant it couldn’t be sure ahead of time which of its truck bodies could be finished and sold, national sales director Craig Bonham says. Reading, based in Reading, Pa., also was concerned about the amount of time it took to get shipments.
“It spans about three months from purchase order to the time you get products to North American shores,” Bonham says. “That timeline did not allow us to become reactionary to market demands.”
Reading lost some sales because it didn’t have the parts to finish a truck a customer wanted. But the impact of unpredictable shipments went beyond lost revenue — it also led to chaos on the production line and frustration among the company’s managers.
“You feel a larger sense of dependency when you’re relying on someone that far away,” Bonham says. The company received its last shipment from Asia in December.
It also dealt with high expenses to send two employees to China each quarter, at a cost of $100,000 a year.
But with production now entirely in the U.S., the company is more confident.
“We have more control of our destiny,” he says.
Follow Joyce Rosenberg on Twitter: @JoyceMRosenberg
Learn how you too can begin reshoring and creating jobs here in the U.S.A. Check out how Harry Moser and his team at the Reshoring Initiative can help. Reshoring Initiative: http://www.reshorenow.org/
Do Americans Really Care How Their Clothes Are Made?
in Jobs, Manufacturing & Sourcing/by MAM TeamHer mother, Ranjana Akhter, was found sobbing near the rubble of the Rana Plaza factory where her daughter worked, days after the eight-story complex collapsed and killed more than 1,100 workers. Viewing dozens of corpses a day, the 35-year-old woman still hoped her daughter had somehow survived.
The victims retrieved from the debris were crushed and unrecognizable in the South Asian heat.
“I am looking for her body, but they are all decomposed now. It’s getting harder to identify,” said Ranjana Akhter, tears falling from her eyes.
The scale of the mismanagement and breadth of the human tragedies in Bangladesh powerfully illustrated what years of abuse, inhumane conditions and unthinkable danger could not: Garment workers in Third World countries take enormous risks to earn a living in Bangladeshi-owned companies that produce clothing for Western retailers.
At the end of this global production line stand millions of American shoppers whose favorite companies and brands — Benetton, The Children’s Place, Gap, J.C. Penney, Mango, Target and Sears — use Bangladesh as a launching pad for the goods Western consumers crave.
Clothing manufacturers in North America and Europe — operating with scant supervision of their operations — have made Bangladesh the second-largest exporter of clothes in the world. The enormity of this tragedy is already beginning to change the country’s free-for-all business climate.
Many international retailers rushed to embrace a labor-backed factory safety proposal after the April 24 collapse, the world’s deadliest industrial accident since India’s Bhopal chemical plant disaster took 2,260 lives in 1984.
4 million jobs at stake
More than 30 retail chains including H&M, the largest clothing producer in Bangladesh, agreed to sign onto the proposal, which requires public disclosure of factory inspections and company-paid renovations when problems are found.
But talks broke down between the labor coalition IndustriALL and trade groups representing U.S. retailers like Gap over language that might make stores liable for conditions in Bangladeshi factories while requiring union-style management restrictions. The retail groups said they could improve worker safety by conducting more rigorous inspections of their factories.
A major pillar of Bangladesh’s economy, the garment industry employs roughly 4 million people. Only China exports more clothing than Bangladesh, which has 5,000 factories of varying sizes producing for other major chains.
These global brands thrive in a place where the average worker earns the equivalent of 24 cents an hour, according to the Worker Rights Consortium, a worker advocacy group that criticized U.S. retailers for failing to sign onto the proposed changes. The wage for garment workers is much higher — sometimes four times that — which is why so many people are drawn to the industry.
Many of the garment operations have sprung up in the past decade in buildings sometimes refurbished in a hurry to capture customers. Western retailers contract with myriad unconnected workshops to get fabric and buttons and fasteners needed for their products. Though many importers require inspectors to check on working conditions, they do not oversee all aspects of building safety. Those laws are the authority of the government, which works hand-in-hand with the industry.
In fact, a consortium of Bangladesh factory owners is also a lobbying group that consults with the government on working conditions and safety matters. Government oversight is notoriously weak.
Rana Plaza was showing structural cracks before the collapse. They prompted some businesses to move out of the building, but that wasn’t enough for the factory to shut down. The owner was captured trying to flee across the Indian border and is under arrest on charges that he built illegal additional floors on a building not designed for manufacturing.
Since 2005, at least 1,800 garment workers have been killed in factory fires and building collapses in Bangladesh, according to the advocacy group International Labor Rights Forum. That includes the toll from Rana Plaza.
Despite this carnage, the retail industry has found a needy home in Bangladesh, a nation of 140 million mostly Muslim people that’s home to regular political strife and overwhelming poverty. Sixty million Bangladeshis are classified as “very poor,” and per capita income is $1,700 a year.
Its garment firms, which make up 80 percent of total exports, face pressure from foreign buyers to retain the nation’s chief selling point: the cheapest place to make clothes. The disaster highlights the perilous choice for Bangladeshis in the garment sector, 80 percent of them women who work as seamstresses and support entire families.
Some survivors say the jobs are no longer worth it.
“I will never work in a garment factory again, and never again in a multistory building,” said Asma Akhter, 22, who lay trapped in the rubble for three days before rescue.
‘This can’t be justified’
After a factory fire last November killed 117 people who were making T-shirts and jackets, “the government didn’t take any steps to prevent this type of incident. Another disaster like this can still happen,” she said.
“The garment factory owners sell the products abroad at a high price, but we get low wages. This can’t be justified,” said Asma Akhter, who hopes her secondary school education, unusual among her colleagues, will aid her job hunt.
Others see it differently.
Seamstress Asma Akhter, 25, who is no relation to the woman of the same name above, said she would be “helpless” without the garment sector.
“I don’t know what I could do,” she said. “If you want to survive you have to work.”
But nothing says world retailers have to stay in Bangladesh.
International companies must contend with a volatile political environment of frequent street agitation and confrontation. Regular strikes called by opposition parties wielding street power hamper production.
“We must stop the killing,” said Nazmar Akter, president of Sommilito Garments Sramik Federation and general-secretary of the Awaj Foundation of workers’ groups.
“It’s a global business. Everybody has the responsibility,” Akter said. “Workers in Bangladesh are unsafe, hungry, with bad living and working conditions. We are human. We want respect and dignity; that’s our demand.”
It’s Not Easy To Be Sure Your Clothes Come From Safe Factories
in Jobs, Manufacturing & Sourcing/by MAM TeamBut when it comes to making sure that their clothes are made in factories that are safe for workers, they fall short.
“Clothing is one of our more challenging practices,” said Jason Lawrence, 35, who mostly buys secondhand. “I don’t want to travel around the world to see where my pants come from.”
Last month’s clothing factory building collapse in Bangladesh that killed more than a thousand people put a spotlight on the sobering fact that people in poor countries often risk their lives working in unsafe factories to make the clothes Westerners covet.
The disaster, which occurred after a fire in another Bangladesh factory killed 112 people in November, highlights something just as troubling for socially conscious shoppers: It’s nearly impossible to make sure that the clothes you buy come from factories with safe working conditions.
Very few companies sell clothing that’s “ethically made,” or marketed as being made in factories that maintain safe working conditions. Ethically made clothes make up a tiny fraction of 1 percent of the $1 trillion global fashion industry. And with a few exceptions, such as the 250-store clothing chain American Apparel Inc., most aren’t national brands.
Major chains typically use a complex web of suppliers that contract business to other factories. That means the retailers themselves don’t always know the origin of clothes when they’re made overseas.
Even a “Made in USA” label provides only a small amount of assurance: The tailors who assembled a skirt may have good working conditions, but the fabric may have been woven overseas in an unsafe environment.
“For U.S.-made labels, you have good assurance, but the farther you get away from the U.S., the less confidence you have,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy.
Policing isn’t easy
Most global retailers have standards for workplace safety in the factories that make their clothes. And the companies typically require contractors and subcontractors to follow the guidelines. But policing factories around the world is a costly, time-consuming process that’s difficult to manage.
There were five factories in the building that collapsed April 24 in Bangladesh. They produced clothing for retailers including Children’s Place and the Canadian company Loblaw Inc., which markets the Joe Fresh clothing line.
“I have seen factories [in Bangladesh and other countries], and I know how difficult it is to monitor the factories to see they are safe,” said Walter Loeb, a New York-based retail consultant.
And some experts say that retailers have little incentive to do more because the public isn’t pushing them to.
America’s Research Group, which interviews 10,000 to 15,000 consumers a week, mostly on behalf of retailers, says shoppers seem more concerned about fit and price than worker safety or low wages.
C. Britt Beemer, chairman of the firm, said shoppers rarely mention “where something is made” or “abuses” in the factories in other countries.
“We have seen no consumer reaction to any charges about harmful working conditions,” he said.
Tom Burson, 49, said that if someone tells him a brand of jeans is made in “sweatshops by 8-year-olds,” he won’t buy it. But overall, there is no practical way for him to trace where his pants were made.
“I am looking for value,” said Burson, a management consultant who lives in Ashburn, Va. “I am not callous and not unconcerned about the conditions of the workers. It’s just that when I am standing in a clothing store and am comparing two pairs of pants, there’s nothing I can do about it.”
New awareness
Some experts and retailers say things are slowly changing.
Swati Argade, a clothing designer who promotes her Bhoomki boutique in the Brooklyn borough of New York as “ethically fashioned,” says people have been more conscious about where their clothes come from.
The store, which means “of the earth” in Hindi, sells everything from $18 organic cotton underwear to $1,000 coats that are primarily made in factories in India or Peru that are owned by their workers or that are designed by local designers in New York.
“After the November fire in Bangladesh, many customers say it made them more aware of the things they buy and who makes them,” Argade said.
Jennifer Galatioto, a 31-year-old fashion photographer from Brooklyn, has become thoughtful about where her clothes are made. “I am trying to learn the story behind the clothing and the people who are making it,” she said.
Some retailers are beginning to do more to ease shoppers’ consciences.
Wal-Mart Stores Inc., the world’s largest retailer, said in January that it would cut ties with any factory that failed an inspection, instead of giving warnings first as had been its practice. The Gap Inc., which owns the Gap, Old Navy and Banana Republic chains, hired a fire inspector to oversee factories that make its clothing in Bangladesh.
Still, Wal-Mart, Gap and many other global retailers continue to back off from a union-sponsored proposal to improve safety throughout Bangladesh’s $20 billion garment industry. As part of the legally binding agreement, retailers would be liable when there’s a factory fire and would have to pay factory owners more to make repairs.
Fair Trade U.S.A., a nonprofit founded in 1998 to audit products to make sure workers overseas are paid fair wages and work in safe conditions, is hoping to appeal to shoppers who care about where their clothing is made. In 2010, it expanded the list of products that it certifies beyond coffee, sugar and spices to include clothing.
The organization, known for its black, green and white label with an image of a person holding a bowl in front of a globe, said it’s working with small businesses such as PrAna, which sells yoga pants and other sportswear items to merchants like REI and Zappos.
To use the Fair Trade label on their products, companies have to follow a set of safety and wage standards.
5% more expensive
Still, less than 1 percent of clothing sold in the U.S. is stamped with a Fair Trade label. And shoppers will find that Fair Trade-certified clothing is typically about 5 percent more expensive than similar items that don’t have the label.
Fair Indigo is an online retailer that sells clothes and accessories that are certified by Fair Trade U.S.A., including $59.90 pima organic cotton dresses, $45.90 faux wrap skirts and $100 floral ballet flats. It generates annual
sales of just under $10 million.
The company’s catalog and website feature some of the garment workers in countries including Peru. “We are connecting consumers with the garment workers on a personal level,” said Rob Behnke, Fair Indigo’s co-founder and president. “We are showing that the garment workers are just like you and me.”
Los Angeles-based American Apparel, which says it knits, dyes, cuts and sews all of its products in-house in California, touts on its website that the working conditions are “sweatshop free.”
In an interview in November, the company’s founder and CEO, Dov Charney, said companies can control working conditions but they need to bring the production to the U.S.
“When the company knows the face of its worker, that’s important,” Charney said.
American Manufacturing Is Going (to New) Places: And What That Means About Jobs
in American Made, Jobs/by MAM TeamCEO, Society of Manufacturing Engineers
If America is to compete with low-waged countries, we must innovate ways to make things more cost effectively than the labor-heavy products that have been outsourced for the last two decades.
Manufacturing has long been the primary source of innovation, and the industry is using this creativity to remain competitive in a global market. And this is impacting the kinds of workers manufacturers need today.
For example, by automating processes, factories can now run “lights-out” operations that require no workers on site. Should we bemoan the loss of the repetitive-assembly jobs that used to be needed to support this type of activity or celebrate that this company can mark their products “Made in America,” and keep the higher-skilled jobs required to keep its lights out here in this country?
Manufacturing jobs are changing. We can no longer expect manufacturing to employ our nation’s low-skilled workers. Manufacturing jobs are now a part of the “knowledge economy.”
A healthy manufacturing industry of the future is one that keeps the research and development, design and production — and the highly paid manufacturing jobs that come with it — in America. Although these jobs won’t be as plentiful as they were in the last century, advanced manufacturing jobs average $77,000 compared with the workers in all other industries who average only $60,200 a year.
This illustrates why it is increasingly more critical to educate and train a workforce that can design parts and equipment, process how parts are made, manage, program and repair high-tech machines.
This education begins in the elementary schools where children are introduced to STEM subjects (science, technology, engineering and math). Participation in programs such as FIRST Robotics and SkillsUSA engage students and demonstrate real-word applications of science and math.
We also need to ensure our educational programs are creating workers ready for today’s jobs. SME is currently working within several communities to connect high schools, community colleges and local manufacturers in order to create a pipeline of future workers. With our knowledge of what manufacturers need, we work with more than 500 schools to offer industry-validated classes that prepare students for professions in today’s manufacturing environment. Online classes, for example, enable teachers to spend less time lecturing and more time applying this knowledge in the lab.
More than two thirds of manufacturers are having difficulty finding skilled employees. We cannot stand by hoping someone else will solve our skills gap crisis. Industry, government and educators need to work together to implement solutions that work.
Change is inevitable in manufacturing. Will we be ready to face the challenges ahead of us? Let’s stop talking and get on with making the future together.
Mark C. Tomlinson, CMfgE, EMCP, is executive director and CEO of the Society of Manufacturing Engineers (SME), a 501(c)3 organization that inspires, prepares and supports the advancement of manufacturing. SME works with government, educators and industry to resolve the skills gap that threatens manufacturing and the U.S. economy. Follow Mark Tomlinson on Twitter: www.Twitter.com/SocMfgEng
Is Reshoring a Myth or Reality?
in Manufacturing & Sourcing, Reshoring/by MAM TeamA lot has changed in four years. At last week’s Del Mar Design and Electronics Show (DMEDS) in San Diego, CA, a very successful fellow manufacturers’ sales rep, stopped me in the parking lot and said, “I used to think you were nuts, but you were right. Manufacturing is returning to America.” While this manufacturers’ representative sales agency is headquartered in southern California, it has affiliate companies in Mexico, Malaysia, China (Beijing, Shanghai, and Shenzhen) and Taiwan (Taipei and Hsinchu) so I did not take this admission lightly.
The theme of this year’s DMEDS was “The Re-Birth of American Manufacturing, and it featured a full-day Reshoring track. This track began with my presentation on “Reshoring: Bringing Manufacturing Back to America Using Total Cost Analysis and ended with “Reshoring: What is a Fit and How Can it Save Your Company Money?” This track also featured “Lean Manufacturing is the Path to Operational Excellence,” “3D Printing: What it is, Isn’t, Will Be and Won’t Be,” and “Save Your Factory with Robotic Automation.”
While there were offshore companies exhibiting at DMEDS, it was dominated by U. S. manufacturers, regional contract manufacturers, and local sales reps and distributors. The buzz at the show was that manufacturing is returning to America, and every contract manufacturer I spoke to at the show had experienced a “reshoring” event.
In the past year, there have been numerous articles debating whether “reshoring” is a myth or really happening. For example, the cover article of the April 22, 2013 issue of Time magazine was “Made in USA – Manufacturing is Back ? But Where are the Jobs? The first page of the article is full of pictures of products that have returned from offshore, representing an unbelievable cross section of consumer goods, ranging from toys such as the Frisbee. Slinky and Crayola crayons to electric mixers, barbecues, saws, hammers, and many more.
The reason the article poses the questions about how many jobs are being created by the return of manufacturing to America is that the manufacturing plants of the present and future have more machines and fewer workers than in the past. Robotics, automation, and lean manufacturing are helping companies do more with fewer people, and the rapidly improving technology of additive manufacturing is changing the way parts are being made.
The article featured a glimpse of manufacturing’s future in the stories of two companies:
ExOne needs only two workers and a design engineer per shift to support its 12 metal-printing machines. The GE plant produces Durathon sodium batteries that are large and powerful enough to power cell phone towers. Because of being highly automated, the plant only employs 370 high-tech workers in a 200,000 sq. ft. facility.
What was most encouraging to me was that the article reported that Ashley Furniture is building a new plant south of Winston-Salem, NC that will employ 500 people. This is an industry that even I doubted would ever come back to the U.S.
Key statistics pointed out in the article were that China’s average hourly wage was only $0.50 in 2000 but is projected to be $4.50 by 2015. This is probably a conservative estimate because China’s wages rose by 15-20% over the last five years but are expected to increase by another 60% in 2013 alone. Another factor noted is that the cost to ship a 40-ft. container from China to the West Coast rose from $1,184 in 2009 to $2,302 this year. These facts corroborate the Boston Consulting Group’s 2011 report that there will be a convergence in the total costs between China and the U. S. by 2015.
This quote from GE CEO Jeff Immelt concluded the article: “Will U.S. manufacturing go from 9% to 30% of all jobs? That’s unlikely. But could you see a steady increase in jobs over the next quarters and year? I think that will happen.” I agree and so does Harry Moser, founder of the Reshoring Initiative and developer of the Total Cost of Ownership TM spreadsheet.
Mr. Moser’s organization promotes and tracks cases of reshoring across the U.S. He estimates that between 2010 and 2012, about 50,000 jobs were created in the U.S. because of the trend—which equates to 10% of the 500,000 manufacturing jobs created in the past three years.
On the myth side of the debate, the 2012 Hackett Group’s report, “Reshoring Global Manufacturing: Myths and Realities” by Michel Janssen, Erik Dorr and David P. Sievers
states, “By next year, China’s cost advantage over manufacturers in industrialized nations and competing low-cost destinations will evaporate.” However, they conclude that “few of the low-skill Chinese manufacturing jobs will ever return to advanced economies; most will simply move to other low-cost countries.
Using hard data from their 2012 Supply Chain Optimization study, they analyzed the trend in “reshoring” of manufacturing capacity, and their findings debunk the myth that manufacturing capacity is returning in a big way to Western countries as a result of rising costs in China. The report states, “The reality is that the net amount of capacity coming back barely offsets the amount that continues to be sent offshore.”
The report also offers recommendations on how companies should plot their manufacturing sourcing strategies. Interestingly, their recommendations incorporate some of the factors that Mr. Moser and I include as part of a Total Cost of Ownership analysis, such as “integrate the views of manufacturing, procurement, finance and business-unit leadership,” “Establish a game plan to deal with risk: Geopolitical, supply base, environmental and commodity risks are a given,” “Establish a proactive approach to anticipate risks, creating mitigation plans with clear triggers for implementation,” and “Broaden the decision making approach beyond total landed cost.”
The Hackett Group’s definition of “Total landed cost” is not as broad and encompassing as the definition of Total Cost of Ownership I provide in the 2009 edition of my book and that Mr. Moser uses in the TCO spreadsheet he developed in 2010. Their definition is “Total landed cost is the set of end-to end supply chain costs to transform raw materials and components into a finished
good ready for sale. Key components include: raw material and component costs, manufacturing costs (fixed and variable), transportation and logistics, inventory carrying cost, and taxes and duties.
My definition of TCO includes the “hidden costs of doing business offshore,” such as Intellectual Property theft, danger of counterfeit parts, the risk factors of political instability, natural disasters, riots, strikes, technological depth and reserve capacity of suppliers, currency fluctuation. Mr. Moser’s TCO spreadsheet includes calculations for factors such as Intellectual Property risk, political instability risk, effect on innovation, product liability risk, annual wage inflation, and currency appreciation.
While the number of companies bringing products lines back to America is increasing, I have to admit that as manufacturers’ sales reps for all American companies; we are still losing business to China for individual parts our principals are quoting. Just recently, we lost several rubber parts that our rubber molder has made for a customer in our territory for 15 years. Our customer had been purchased by a multinational awhile back that has a subsidiary in China, so the new management decided to tool up these parts in China and discontinue ordering them from our molder. I am sure that the decision was made based on the lower piece price without doing a TCO analysis.
You can help your company get the most value for its dollars and help return manufacturing to America by doing the following:
I strongly believe that if more companies would learn to understand and utilize the TCO estimator spreadsheet of the “Reshoring Initiative,” they would realize that the best value for their company is to source their parts, assemblies, and products in America. Doing this would help return manufacturing to America to create a far higher percentage of jobs than the 10% that have been brought back to America thus far and help maintain more manufacturing in U. S.
Legislation Seeks to Tweak Standards for Made in USA
in American Made, Government/by MAM TeamAmerican Made Clothing Companies Find Ways To Survive As Others Chase Cheap Labor Abroad
in American Made, Products/by MAM TeamHenry has been in the apparel business for three decades, enough to see nearly all of his competitors disband or head overseas in search of workers who will do the job for lower wages. Henry has taken the opposite route, shrinking the geographic scope of his supply chain and making that a marketing feature.
His company makes its products “dirt to shirt” through a supply chain that spans only 600 miles and boasts complete transparency. Customers are invited to use a website to input a special code emblazoned on the back of every shirt. The site then serves up the name, photo and contact information for every person whose labors went into creating the product, from the farmer who grew the cotton to the workers who print and dye the shirts.
His “most sustainable” T-shirt, which uses certified organic cotton, a transparent supply chain, with a patented environmentally-friendly print and dye system, costs around $14 wholesale. The same type of shirt would cost about $8 to make overseas, he estimated. In short, the $6 gap.
The difference comes down to paychecks. Workers at TS Designs in North Carolina are paid an average of $15 an hour, Henry said. The average factory worker in Bangladesh makes $0.21 an hour, according to the Institute of Global Labor and Human Rights.
“Our T-shirts cost more because of where they’re made and how they’re made,” said Henry, admitting that he can’t compete on price alone.
In the wake of the worst garment industry accident in history — the collapse of a factory in Bangladesh, which took the lives of more than 600 people — attention is again focused on the full costs of churning out low-priced goods via a global supply chain. Consumers are absorbing another reminder that bargains on store shelves in Los Angeles and Philadelphia may come at the expense of people toiling in unsafe conditions in Dhaka and Guatemala City.
For Henry and like-minded entrepreneurs in the U.S. — those seeking to buck the trends of global trade by manufacturing at home — the hope is that this consumer awareness may expand their market niche.
Online apparel retailer American Giant, for instance, does not compete with the world’s largest apparel brands on price. A men’s T-shirt bearing its label runs $24.50 — roughly four times more than its most inexpensive counterpart on the shelves at Walmart, Target or some other enormous retailer.
Ask the company’s chief executive, Bayard Winthrop, about disparity in price and he will tell you about the workmanship and quality of raw materials that goes into his T-shirts. But he will also tell you about geography: His shirts are made in America, and not on the other side of the world, in a poor country in which workers may be mistreated.
“I need to give that consumer an option for a product from a company that fits their system of beliefs,” Winthrop said.
Winthrop’s emphasis on quality is both a virtue and a necessity. Even mighty Walmart, the world’s largest retailer, could satisfy the consumer craving for low prices if it made its wares exclusively in the United States, he said.
“Can Walmart make a $5 tee in the U.S.? Probably not,” Winthrop said. “But can they make a $9 tee that lasts longer and made in the U.S.? Yes they could.”
Using hypothetical figures, Winthrop explained that if a manufacturer makes a T-shirt for $6 in the U.S., $3 of that would be fabric and design, while the other $3 would be labor. If you take production overseas, the labor cost would be less than $1. The fabric and design cost doesn’t change much, he said, especially for a simple piece of apparel like a T-shirt.
So vast is the apparel and so large the companies involved that they have hop-scotched the globe in permanent pursuit of lower labor prices somewhere new. In the United States, some 97 percent of all apparel is now imported, according to the American Apparel and Footwear Association.
This pursuit of lower prices through globalization amounts to a “race to the bottom,” said Pietra Rivoli, a professor of finance and international business at Georgetown University, and author of the book The Travels of a T-Shirt in the Global Economy.
“This industry is so mobile that it gets fixed in one place and then pops up somewhere else,” Rivoli said.
But American apparel manufacturing may eventually see a resurgence, some experts said. The garment industry is undergoing the kind of technological change reshaping many industries: Machines are increasingly attending to tasks once performed by humans. That undercuts the overall cost advantages of going overseas in search of cheaper labor. As automation emerges as a greater force in the apparel trade, that could send investment back to the United States, where mastery of machinery remains a core strength.
“Technological progress has taken away the worst part of many jobs,” said Rivoli.
Right now, complicated tasks are still done by humans, such as the manual addition of buttons and zippers to clothing. But that is changing.
“It’s gradually mechanizing,” said Rivoli. “If you can get that to be 100 percent true and it’s machines that are producing our T-shirts, then companies aren’t going to be chasing around the world for those labor costs.”
Where China Goes To Buy Made In USA
in Economy, Government/by MAM TeamChina’s Favorite U.S. States in 2012
In 2012, China purchased nearly $109 billion worth of U.S. goods, from soybeans to scrap metal, electronic components to heavy machinery. China will undoubtedly play a significant role as importer of Made in USA as locals keep getting richer. Some estimates forecast that China may have nearly 600 million middle class consumers by the end of the decade, as measured by the World Bank’s definition of middle class.
“Our exports to China remain a bright spot for many companies, particularly with European demand weakening,” said Frisbie in a statement last week.
Even though China’s economic growth slowed last year, growth in U.S. exports to China rose 6.5% from 2011, representing an increase of $6.6 billion.
Here’s a look at the top 10 states where Chinese companies go shopping for Made in USA.
Bill Would Create Made in California Label
in American Made, Economy/by MAM TeamAll American Clothing Co. Launches New Tee Shirt Products that are ‘Grown and Sewn’ in the USA.
in American Made, Products/by MAM TeamThe new USA made tee shirts are available in the three styles of a ‘Freedom Eagle Seal’, ‘Logo Tee’, and ‘Premium Quality Denim.’ All feature a distressed design printed on the front of a heavyweight 6.1 oz, 100% cotton American made tee shirt. The All American style and durability of the tees make them perfect for work or play. The new tee styles will join a wide selection of American made jeans, short, shirts, footwear, and accessories.
One purchase from All American Clothing can help the American economy in many ways. For example, the clothing is made in the USA, the box it was shipped in was made in the USA, the website is hosted by a USA company, the shipping companies are all from the USA, and the people who make and deliver the clothing are U.S. citizens. Purchasing one made in USA shirt or a pair of jeans affects many jobs in many different industries.
About All American Clothing Co.
All American Clothing is a success story that continues to prove the American dream can still be achieved. The entire company supports a “USA Made passion” as they strive to foster loyalty among customers. All American Clothing Co. is conceivably the poster child for American made small business success stories. To find out more about the passion and effort it takes to build a business in today’s economy please visit http://www.allamericanclothing.com.
Logan Beam
All American Clothing Co.
888-937-8009